This Country Wants Your Money. Should You Hand It Over?

Situated prominently in the Asia-Pacific, with a GDP of $1 trillion, the country of Indonesia is promoting itself as politically stable, backed by sound macroeconomic policy, and having a young demographic (50% of citizens are under the age of 30).

Although it has long relied on tourism for its economy, a new ad campaign is urging foreigners to invest.

Politically stable or no, this country's reputation for corruption lingers despite investment opportunities. If you're not ready to dive headfirst into the Pacific, dip your toes by investing in the many American companies who have expanded into the archipelago.

Hello, mermaid
When a Starbucks (NYSE: SBUX  ) opened in the cultural hub of one of its islands, tourists and locals alike bemoaned the death of Indonesia. But stroll through Ubud and you'll see there is still a plethora of local coffee shops. That hasn't stopped Starbucks from catering to the international crowd with a bit of local flavor. Situated next to a temple with a view of its Thursday night cultural performances, the building is designed to merge with the local environment. As of its annual report in October, the sassy siren had 109 stores on in Indonesia, more than many countries in Europe.

Polo, anyone?
You can't walk down the main drag in Kuta or Monkey Forest Road in Ubud without stumbling across a man on a horse. The official Ralph Lauren (NYSE: RL  ) Polo stores are as ubiquitous as scooters, leading tourists on several online forums to wonder if the shirts these stores are selling are knockoffs. (They're not.)

In 2009, Ralph Lauren Polo bought back its license from Dickson Corporation, a Hong Kong-based company. The brand is now wholly owned in Asia-Pacific (except Japan and South Korea). While the details of the Indonesian arrangement are difficult to pin down, Ralph Lauren is exploding in Asia overall, with net revenues up from $464 million in 2009 to $658 million in 2010.

It's a gas
While Chevron (NYSE: CVX  ) may be second in size to Exxon (NYSE: XOM  ) , the company's commitment to cleaner energy, including its role as the leading global producer of geothermal, makes it a better bet than its rival. Chevron has a huge presence in Indonesia, both as the country's largest crude-oil producer and through the company's island-based geothermal operations. Like most oil companies, it continues to be plagued by issues relating to oil spills, most recently in Brazil, where it's currently facing a lawsuit and ongoing problems in its Latin America division.

The tide is out on this stock
When you name a company after something that means "liquid, mercurial, and quick-changing," you're asking for trouble. If you're a surfer, you know Quiksilver (NYSE: ZQK  ) . If you're an investor, you probably don't. There's a reason for that. The board-shorts company, which also owns ROXY swimsuit brand and DC Shoes, is drowning in its debt-to-equity ratio, has a negative profit margin, and suffers an operating margin so slim it would fit into a junior swimsuit.

The stock, which opened at $25 in 1990, never rebounded from the 2008 crash. While the current $4 price tag may be tempting, your investment would be better spent on a jar of board wax.

The Foolish bottom line
While Indonesia may be promoting itself as a country with a stable government, that government has yet to fully tackle the issues that have kept investors away in the past. Simply put: The future has not yet arrived for the archipelago.

As I mentioned above, less risky than investing directly in Indonesia is adding stocks to your portfolio with a strong presence in the Asia-Pacific market. Several of these companies are listed in this special free report, "3 American Companies Set to Dominate the World," which includes the top three stocks for the emerging market. Download a copy today -- it's free for Fools.

Think I'm wrong about Indonesia? Hate the Starbucks in Ubud? Love your Quiksilver shorts? Let me know below.

Molly McCluskey owns shares of Starbucks, and she thinks the store in Ubud is lovely, but a little stingy with its Wi-Fi access. Follow her on Twitter at @MollyEMcCluskey. The Motley Fool owns shares of Starbucks. Motley Fool newsletter services have recommended buying shares of Chevron, ExxonMobil, and Starbucks. Motley Fool newsletter services have recommended writing covered calls on Starbucks. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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